Question

List all the factors cause the supply curve to shift. Explain what each factor is in detail and provide a real world example of each one.

Answer 1

Answer - The shift in the supply curve is caused by the factors other than the price . The price remains constant here . The factors that cause the shift are as follows -

1 - Change in technology - The favourable change in technology will cause the supply curve to shift to right and increase the supply. The use of outdated technology will cause a left ward shift and cause the supply to decrease.

Eg. - The updation of the technology may help in the production of more goods thus supply will increase.

2 -cost of inputs - Due to increase in cost of inputs , the production cost will increase and profits will decline. Thus the supply curve will shift to left. In case of decrease in cost of inputs , the reverse thing will take place leading to rightward shift.

Eg - In producing leather shoes , Cost of leather increased from $ 200 per meter to $ 300 per meter. As a result the profit of $ 1000 per shoe declined to $ 800 per shoe. Thus , in future , the seller will be able to supply less.

3 - Number of sellers - The increase in number of sellers will bring more quantity to market thus the supply will shift to right. The opposite case will take place when the number of sellers decline.

Eg - In a market , due entry of 2 more shoe sellers , the supply of 1000 shoes per day increased to 1300 shoes per day.